There is a lot of pedantry and probably a lot that you already know, but if you're in the mood for a long read, or need to patch some holes in your foundational understanding of blog content, take a peek at today's consumer blog, either linked at the top of the page or
http://www.mortgagenewsdaily.com/mortgage_rates/blog/consumer.asp
And as always, if you find the consumer blog significantly easier to understand or simply find the professional blog slightly (or intensely) esoteric, make sure you have read the MBS primer linked at the top of the page and that you are up to speed on the current list of Jargon in the "list of terms."
Soon enough, all of this will be moot as it will be managed by a new interface.
Since I believe it has fallen off the main page, here is a current list of terms,
- CC's
- Current Coupons. Basically it's whichever coupon in the FNMA 30 yr fixed stack that happens to be the most liquid or closest to par.
- Choppy
- refers
the the prices of MBS vacillating wildly (big differences between highs
and lows and lots of back and forth in between).
- MBS -
- Mortgage Backed Security
- MDPC-
- Mid Day Price Change (plus means for the better, minus for the worse)
- DOW or DJIA -
- Dow Jones Industrial Average
- Ticks-
- 1/32nds of bond pricing. 8 ticks=8/32nds=.25 in cost (YSP or discount)
- DoD, YoY, MoM-
- Day over day, year over year, month over month, etc..
- O/N-
- Overnight
- Coupon-
- The "interest rate' of the MBS
- 6.0's, 5.5's
- always means FNMA 30yr Fixed MBS with a coupon of that number. 6.0's = 6.0% coupon rate MBS
- PCE-
- Personal
Consumption Expenditures, a component of the Income and Outlay report
and one of the Fed's preferred inflation indicators
- UST-
- United States Treasury Bonds. 5UST = 5 year, 10UST = 10 year, etc..
- NAPM (PMI)
- National association of purchasing management (Purchasing Manager's Index)
- ISM (MFG)
- Institute for Supply Management (mfg: manufacturing)
- Wide/Gap/Gappy
- refers to the wideness or gap between treasury yields and MBS yields.
- "Going Out"
- 4:45PM EST. Official Close is 3pm EST
- FI
- "fixed income." For our purposes, will simply refer to treasuries and MBS
- NFP
- Non-Farm Payrolls. Key part of employment report. Most meaningful gauge of labor market
- ADP
- ADP private payrolls, some feel a precursor to NFP, but historically quasi-accurate at best.
- GSE
- Government Sponsored Enterprise. Refers to Fannie Mae and Freddie Mac
- PPI
- Producer Price Index. A key inflation indicator.
- CPI
- Consumer Price Index. An even more key inflation indicator.
belly / wing
refers to the different portions of the "stack" (the range of different MBS coupons within a certain coupon type. If a coupon type is a FNMA 30 year fixed, then the range of coupons could be from 4.5-8.0. The "belly" refers to the two or three coupons that are trading closest to PAR (price of 100-00). So since the 6.0 is currently at PAR (ish), and neither the 6.5 or the 5.5 are more than 3 points away, this would be the belly. The wings would be all other coupons.
48 hour class A notification:
MBS are really TBA MBS meaning that the actual pools of loans that will compose the security are not necessarily decided at the time of the trade. In this case, I could say that I'd like to sell 1 million dollars of 6.5's today on August 11th, even though I might not have funded any loans. My settlement date for that million would not be occurring until some predetermined date in the future (usually 3 months or less out, the quicker, the better the price I get), In this case, it would be 9/11/08. As long as I fund 1 mil of securitizeable loans by then, I can begin to NOTIFY the buyer that purchased my loans of what the pool will contain, or if I will "roll" to an October delivery. After 48 hours, then it's time to actual finalize the transaction ("settlement").
MBS Market Alerts
